Answer:
Journals :
December 3
Accounts Receivable :Hatcher Corp. $492,000 (debit)
Cost of Sales $309,000 (debit)
Sales Revenue $492,000 (credit)
Inventory $309,000 (credit)
Sold goods on credit to Hatcher Corp
December 8
Sales Revenue $3,200 (debit)
Inventory $2,010 (debit)
Accounts Receivable : Hatcher Corp. $3,200 (credit)
Cost of Sales $2,010 (credit)
Hatcher Corp. returned goods
December 12
Cash $43,920 (debit)
Discount allowed $4,888 (debit)
Accounts Receivable : Hatcher Corp. $488,800 (credit)
Payment received from Hatcher Corp and discount allowed recognized
Net Sales to be reported :
Net Sales = $483,912
Gross profit percentage ;
36.56 %
Explanation:
Payment made by Hatcher Corp is still within 10 days (the discount period) thus the customer is eligible for a cash discount calculated on the sales amount less returns as follows :
Discount allowed = $488,800 × 1%
= $4,888
Thus,
Net Sales = $492,000 - $3,200 - $4,888
= $483,912
Gross Profit Percentage = Gross Profit /Sales × 100
Where
Gross Profit = Sales - Cost of Sales
= $483,912 - ($309,000 - $2,010)
= $176,922
Therefore,
Gross Profit Percentage = $176,922/ $483,912 × 100
= 36.56 %
